David F. Nelson, Esq.
Schumacher, Francis & Nelson
Charleston, West Virginia
Attorneys for Appellants John See and
Mark A. Ferguson, Esq.
Sprouse & Ferguson, PLLC
Charleston, West Virginia
Attorneys for Appellee Sue Martin Politino
The Opinion of the Court was delivered PER CURIAM.
JUSTICE ALBRIGHT dissents and reserves the right
to file a dissenting opinion.
If there is no genuine
issue as to any material fact summary judgment should be granted but such
judgment must be denied if there is a genuine issue as to a material fact.
Syllabus Point 4, Aetna Casualty and Surety Company v. Federal Insurance
Company of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963).
This is an appeal by Azzon,
Inc., and John P. See and Brenda See, from a summary judgment entered by the
Circuit Court of Kanawha County in an action instituted by Sue Martin Politino.
The appellant John P. See was ordered to pay Ms. Politino $83,643.53, together
with interest, from January 15, 1997. On appeal, the appellants claim that
the circuit court erred in entering the summary judgment.
The appellant Azzon, Inc.,
is a corporation organized by John P. See and Rodney Politino on May 20, 1993.
Mr. See and Mr. Politino were also the officers and stockholders of the corporation.
In 1994 and 1995, Azzon, Inc., borrowed substantial sums of money to finance its operations. Its borrowings were consolidated on September 25, 1995, in a $75,000 loan made by Merchant's National Bank of Montgomery, West Virginia. Mr. See and Mr. Politino each personally guaranteed this loan. Additionally, Sue Martin Politino, Rodney Politino's wife, who had already leased certain construction equipment which she personally owned, to Azzon, Inc., pledged other construction equipment, which she also personally owned, to secure the loan.
On November 17, 1995, without the knowledge or consent of John P. See, Rodney Politino and Sue Martin Politino incorporated Sue's Reclamation & Construction, Inc., which was organized to engage in the same type of business as Azzon, Inc. When later asked why this corporation was organized, Sue Martin Politino stated that she didn't expect Azzon to eventually go on, and I have at the time four children to feed.
After Sue's Reclamation
& Construction, Inc., was formed, Azzon, Inc., experienced increasing
difficulty in its operations, and by December 1995, approximately a month
after Sue's Reclamation & Construction, Inc., was formed, Azzon, Inc.,
had defaulted on the lease of its business premises. Shortly thereafter, it
was evicted from its premises. When this occurred, it left certain tangible
personal property on the premises.
On March 1, 1996, Sue's
Reclamation & Construction, Inc., leased Azzon, Inc.'s, former business
premises from Azzon's former landlord. Also, in March 1996, Sue Politino repossessed
equipment which she had leased to Azzon, Inc.
Azzon, Inc. failed to make
the payments required under the note with the Merchant's National Bank of
Montgomery, West Virginia, and by letter dated August 21, 1996, Merchant's
National Bank notified Sue Martin Politino that it was demanding payment in full on the outstanding balance of the note. After receiving the notice,
Sue Martin Politino agreed to pledge additional collateral to forestall further
action by the bank.
In spite of this, in December
1996, Merchant's National Bank demanded that Sue Martin Politino pay off the
note. To forestall further action, Sue Martin Politino, after receiving this
notice, on December 9, 1996, paid $44,936.69 as a partial payment on the note.
Thereafter, by letter dated
December 18, 1996, the bank notified Sue Martin Politino that it was demanding
full payment of the remaining balance of $34,617.45, plus accrued interest.
When Sue Martin Politino failed to make the additional payment, the bank repossessed
the collateral which she had previously pledged for Azzon's debt. To avoid
loss of this collateral, Sue Martin Politino individually borrowed additional
funds and paid the bank.
Subsequently, Sue Martin
Politino instituted the present action against Azzon, Inc., and John P. and
Brenda See, who had co-signed Azzon's note to Merchant's National Bank, claiming,
among other things, that she was entitled to subrogation for the amounts which
she had paid to the bank to repay her collateral. She did not sue her husband,
Rodney Politino, who has also co-signed the note.
In response to Sue Martin Politino's
complaint, Azzon, Inc., and John P. and Brenda See filed an answer and a counterclaim
in which they made several assertions relevant to the present appeal. First,
they alleged that Rodney Politino, as an officer and director of Azzon, Inc.,
owed Azzon, Inc., and its shareholders, including John See, a fiduciary duty,
and that this duty was breached when he had diverted business opportunities
to Sue's Reclamation & Construction, Inc., and when he had commenced working
for Sue's Reclamation & Construction, Inc.
They also, in effect, alleged
that Sue Martin Politino was vicariously liable for Rodney Politino's breaches
of fiduciary duty in that she had entered into a civil conspiracy with Rodney
Politino to commit the wrongs charged. They implicitly claimed that Sue Politino's
vicarious responsibility acted as a bar to her recovery and her subrogation
They alleged that Sue Politino,
both actively and vicariously, as a co- conspirator with Rodney Politino,
had wrongfully converted and taken possession of various equipment and assets
owned by Azzon, Inc.
They claimed that to allow
Sue Politino's subrogation claim would create an unjust result. In essence,
they claimed that the improper conduct of Sue Politino, both personally, and
as co-conspirator with Rodney Politino, had impaired Azzon, Inc.'s ability to function and had contributed to their own enrichment, and that to allow
Sue Politino to recover on her subrogation claim would result in her own unjust
Subsequent to the filing
of the initial pleadings, various motions and pleadings and depositions were
filed, and ultimately the circuit court granted Sue Martin Politino summary
judgment on her subrogation claim against John P. See in the amount of $83,643.53.
The court, however, stayed enforcement of the order pending a resolution of
the remaining claims in the case.
On August 31, 2000, the
circuit court granted Sue Martin Politino summary judgment on the remaining
issues affecting her right to recovery in the case. The court made a number
of findings and reached a number of conclusions relevant to the present appeal.
First, the court found that there was no evidence that the Politinos or Sue's
Reclamation & Construction, Inc., had diverted any business opportunities
from Azzon, Inc. Specifically, the court noted that the record was totally
void of evidence suggesting that after Rodney Politino ceased working for
Azzon, Inc., Azzon, Inc., made any effort whatsoever to obtain new contracts
or to bid on new jobs, and the court said: As a matter of law, Azzon
cannot have been deprived of corporate opportunities that it never sought.
Second, the court concluded
that the only benefit which inured to Sue's Reclamation & Construction,
Inc., or to Sue Martin Politino from Rodney Politino came from the work which
Rodney Politino did for Sue's Reclamation & Construction, Inc., and inferred
that any wrongdoing associated with this was the wrongdoing of Rodney Politino
rather than Sue Martin Politino.
The court found that there
was no evidence of a civil conspiracy on the part of Sue Martin Politino and
Rodney Politino and inferred that in the absence of such a conspiracy, any
wrongdoing on the part of Rodney Politino could not be imputed to Sue Martin
Politino so as to effect Sue Martin Politino's subrogation claim.
The court found that the
property which was the subject of Azzon, Inc.'s conversion claim consisted
of equipment which was left by Azzon, Inc., at its leased premises following
its eviction as a tenant. The court concluded that the property had been abandoned
and, in essence, concluded that Azzon, Inc., had not retained such rights
in it as would support a claim of conversion.
Finally, the court suggested
that the only benefit which Sue Politino had derived from the overall situation
was the benefit of Rodney Politino's efforts on behalf of Sue's Reclamation & Construction, Inc., and that benefit was not due,
either directly or vicariously, to Sue Martin Politino's wrongdoing.
Accordingly, the court granted
Sue Martin Politino summary judgment and entered the order from which Azzon,
Inc., and John P. and Brenda See now appeal.
In Syllabus Point 4 of Aetna
Casualty and Surety Company v. Federal Insurance Company of New York,
148 W. Va. 160, 133 S.E.2d 770 (1963), this Court stated: If there
is no genuine issue as to any material fact summary judgment should be granted
but such judgment must be denied if there is a genuine issue as to a material
On appeal, one of Azzon,
Inc.'s, principal assertions of error is that the trial court erred in granting
summary judgment on its civil conspiracy claim because it claims that it did introduce sufficient evidence to show that there was a civil conspiracy
between Sue Martin Politino and Rodney Politino.
(See footnote 1)
This Court has recognized the concept of a civil conspiracy, and in Dixon v. American Industrial Leasing Company, 162 W. Va. 832, 253 S.E.2d 150 (1979), adopted the definition of civil conspiracy set forth in 15A C.J.S. Conspiracy § 1(1). The Court stated:
As succinctly stated in 15A C.J.S. Conspiracy, Sec. 1(1), a civil conspiracy is a combination of two or more persons by concerted action to accomplish an unlawful purpose or to accomplish some purpose, not in itself unlawful, by unlawful means.
Id. at 834, 253 S.E.2d at 152.
The law on civil conspiracy
recognizes a distinction between a combination which is motivated by the malicious
desire to destroy another's business and one motivated by the simple desire
to compete and engage in business. As stated in 15A C.J.S. Conspiracy § 10(1): There is a clear distinction between acts which
have inducement in malice or ill- will and those which have inducement in
business competition and rivalry; the latter are legal competitions and the
former are not. Where two or more people combine together simply for
the purpose of engaging in business competition and rivalry, the combination
cannot be considered a civil conspiracy. On the other hand, where persons
combine not for the purpose of protecting or advancing their own legitimate
interests but for the purpose of injuring another in his trade or business,
they are guilty of an unlawful conspiracy which, when executed and when damage
results therefrom, is actionable . . . . 15A C.J.S. Conspiracy § 10(1).
In effect, where the purpose of the combination and competition is a malicious
purpose, that is, to destroy another's trade or business, as opposed to simply
competing with the other, then a civil conspiracy may legally be found.
There is a conflict in the
evidence as to why Sue's Reclamation & Construction, Inc., was organized.
On the one hand, its charter provisions would seem to indicate that it was
to engage in reclamation work. On the other hand, there is evidence suggesting
that Sue's Reclamation & Construction, Inc., was originally organized
for tax purposes to receive the payments which were due to Sue Martin Politino
personally from Azzon, Inc., for her lease of her personal equipment to Azzon,
Inc. However, it is clear that shortly after Sue's Reclamation & Construction,
Inc., was formed, the affairs of Azzon, Inc., went into a steep decline. By
December 1995, some two weeks after Sue's Reclamation & Construction, Inc., had been incorporated, Azzon, Inc., had defaulted on
the lease of its business premises and had ceased to seek new business. Although
it continued to finish up certain work in progress, it did not seek, or bid
for, new work. And it appears from the deposition of John P. See that this
was attributable to Mr. See's inaction rather than the activity of Rodney
Politino. Mr. See testified:
Q. Now, I understand from what you said earlier that you were primarily responsible for bidding jobs for Azzon?
A. [MR. SEE] Yes, sir.
Q. Okay. So why is it that Azzon wasn't able to continue bidding for jobs . . .?
A. Well, we could have, but I couldn't see any point in it.
Sue Martin Politino, when
questioned about what she believed when Sue's Reclamation & Construction,
Inc., was organized, testified: I didn't expect Azzon to eventually
go on, and I have at the time four children to feed.
These facts, the Court believes,
suggest that at the time Sue's Reclamation & Construction, Inc., actually
began engaging in business, Azzon, Inc., was a failing concern and that John
P. See himself perceived that it was futile to continue. Additionally, they
show that the motivation for the formation of Sue's Reclamation & Construction,
Inc., was not the desire to damage or destroy Azzon, Inc., but rather the
desire on the part of the organizers of Sue's Reclamation & Construction, Inc., to establish a successful
business. In effect, the Court believes that the record show that there was
a simple business motive behind what occurred.
In light of the fact that
the law recognizes that combinations which have inducement in business competition
and rivalry only, rather than inducement in malice or ill- will, are legal
combinations and not civil conspiracies, this Court believes that the circuit
court properly concluded that the civil conspiracy claim asserted by Azzon,
Inc., was not supported by the evidence and that summary judgment rejecting
the claim was appropriate.
As previously stated, this
Court believes that the documents filed fail to demonstrate a civil conspiracy.
The remaining question in the present allegation is, therefore, whether there is a material question of fact as to whether Sue Politino
personally converted the property in question.
This Court has indicated
that any distinct act of dominion wrongfully exerted over property of another,
and in denial of his rights, or inconsistent therewith, may be treated as
conversion. Rodgers v. Rodgers, 184 W. Va. 82, 399 S.E.2d 664
Information concerning the
alleged conversion in the present case is contained in the deposition of John
P. See taken on September 9, 1999. In that deposition, Mr. See described the
equipment in question as being a generator, a fuel truck, a lowboy trailer,
and a box trailer. The questioning of Mr. See proceeded as follows:
Q. Were those-- Were those pieces of property, were they all titled in Azzon's name?
A. [MR. SEE] I know the fuel truck was.
Q. Just tell me in your own words what happened to them and how did that come about that Azzon lost them and the Politino's got them.
A. Well, in 1996, I guess in January 1996, we were more or less evicted from Azzon. When I say we, the shop area that we had leased, for nonpayment of lease, so-to-speak, because, as I indicated, we didn't have the cash flow to do that.
Q. Who was your landlord?
A. Triple B Equipment, I believe it was.
Q. Did either you or Mr. Politino have any connection with that company?
A. No, sir.
Q. Okay. So you all were evicted from the premises in January of '96, and then what happened?
A. Well, as far as from what I understand, Sue Politino took over the--
Q. You can go ahead--
A. --rent, so-to-speak.
Q. --and just tell me what your understanding is.
A. That's my understanding.
Q. Your understanding is she took over what?
A. The lease of that.
Q. Those premises?
A. Right. And this is where the equipment was located, so- to-speak.
Q. So the equipment just stayed there?
A. Yes, sir.
Q. And thereafter, you haven't seen it since then.
A. No, sir.
Q. Is that what you're saying?
A. Yes, sir.
so it's your understanding and belief and assumption that Sue Politino or her
company or Rodney or some combination of them had control over the equipment
and that they must have used the equipment after that.
A. Yes, sir.
Q. Do you know for a fact whether or not they actually used the equipment, or could it have just sat there for years?
A. I don't know for a fact, no. Well, like I said, I do know to a degree, but I can't say.
A. I can't say definitely.
Q. Well, do you have it-- Let me ask it this way. Do you have any reason to believe that they actually used or employed any of this equipment?
A. Yes, sir.
Q. Why do you believe that they did?
A. Well, because the status of the lowboy trailer that Azzon, Inc., was purchasing from-- John Deere?
MR. NELSON: Yeah, I think that's right.
THE WITNESS: --John Deere. Mr. Politino had that in his control and he was, as far as I know, utilizing the trailer to haul Sue's Reclamation's equipment around to different jobs. The lowboy was repossessed by John Deere, and they had problems locating where it was at.
BY MR. COLLIAS:
Q. So it's your understanding that the lowboy was repossessed by John Deere then?
The testimony of Mr. See proceeded as follows:
these items that we've talked about just to clarify, the Mack truck and the
generator and the fuel truck and the lowboy and the box trailer, those all
belong to Azzon?
A. Corporation, yes, sir.
Q. Right. Okay. Is there any reason that, when Azzon was evicted, that Azzon couldn't have taken all these vehicles and this property and all and taken it and moved it off the premises? I assume your landlord wanted it off the premises?
A. Uh-huh. He demanded we take it off the premises.
Q. Why didn't Azzon do that?
A. Why didn't Azzon do that? How can I say that? I don't really know why we didn't do it, to be honest with you. I should have had them buy it.
The deposition of Rodney
Politino indicates that on a couple of occasions, Sue's Reclamation &
Construction, Inc., used the lowboy trailer and that it was ultimately repossessed
by a lender because of Azzon, Inc.'s, default on a loan after Mr. See, according
to his own testimony, had tried to arrange for Rodney Politino, or Sue's Reclamation
& Construction, Inc., to assume the loan.
The circuit court concluded
that this evidence showed that Azzon, Inc., abandoned the equipment in question
when it was evicted from the leased premises. This is borne out by the evidence.
Although there is some suggestion Sue's Reclamation & Construction, Inc.
may have used the lowboy trailer on a couple of occasions, in this Court's opinion,
there is no evidence that Sue Politino personally assumed control over, or ever
personally exercised dominion over the property in question. Even if the circuit
court improperly found that the property was abandoned, there is no evidence
that Sue Politino committed an act which would amount to conversion.
In view of the fact that this Court has concluded that the facts fail to show a civil conspiracy, as that is contemplated under the law, this Court does not believe that any breach of fiduciary duty, or inequitable conduct, on the part of Rodney Politino can properly be attributed to Sue Martin Politino, and since Sue Martin Politino is the subrogee involved in the present case, any inequity involved in the conduct of Rodney Politino cannot be invoked to preclude Sue Martin Politino's recovery on her subrogation claim.
Finally, Azzon, Inc., and
John P. See claim that the circuit court's summary judgment order is improper
because it allows Sue Martin Politino a double recovery.
In conjunction with this,
Azzon, Inc., and John P. and Brenda See point out that the loan of Azzon,
Inc., which Sue Martin Politino ultimately repaid, was personally guaranteed
not only by John P. See, but also by both by the Sees and by Sue Martin Politino's
husband, Rodney Politino. Azzon, Inc., and John P. and Brenda See argue that
beginning in 1996 and through 1997-1998, Sue Martin Politino used the services
and labor of her husband, the co-obligor, Rodney Politino, in conjunction
with the operation of Sue's Reclamation & Construction, Inc., and that
Rodney Politino received no compensation for his efforts.
During the taking of her deposition,
Sue Martin Politino was, in effect, asked why she had not joined her husband,
Rodney Politino, as a party defendant in her action seeking subrogation. She
A. His_Him not receiving a salary, to me, is, he's paid in full, because he has worked so hard_
A. (continuing) to keep everything going, and me keeping what belong to me and my first husband.
Azzon, Inc. and John P.
and Brenda See are apparently equating this statement to being an acknowledgment
by Sue Martin Politino that the subrogation claim which she had had been fully
satisfied. They proceed to state in their brief: Having elected and
received payment on the debt from one guarantor, Ms. Politino cannot seek
recovery on this debt from anyone else. They go on to argue that if
the circuit court's judgment that they pay Sue Martin Politino, as subrogee,
is allowed to stand great injustice will occur. Ms. Politino will be allowed
to recover twice for the same obligation.
This Court believes that
the interpretation which Azzon, Inc., and John P. and Brenda See seek to impose
on Sue Martin Politino's remarks takes those remarks out of context and is
not correct. Sue Martin Politino did not state that she considered the subrogation debt fully paid and satisfied. She told why she had elected
not to assert the claim against her husband.
Additionally, the Court
believes that the fact that Sue Martin Politino instituted the present action
for definite monetary compensation shows that she considered her claims as
subrogee unsatisfied. As a consequence, the Court believes that the unjust
enrichment claim is without merit.
In view of the foregoing,
this Court believes that the trial court properly entered summary judgment
in this case and that that judgment should be affirmed.